Does No Closing Costs Sound Too Good To Be True?
Your father probably told you that there is no such thing as a free
lunch. Chances are slim, however, that he ever explained how that adage
applies to mortgages. So I will tell you --- there is no such thing as
no closing costs.
While closing costs can differ depending on how and where you borrow your money,
there are always costs associated with it, and someone (you) is
going to pay those costs.
It's important first to understand what people are referring to when they
say closing costs. Scratch the surface of the long list of
costs associated with closings and you'll see they are things like title
search, title insurance, and attorney fees. It can be tempting to look the
other way, and just ask for the total amount and where you sign. However,
it's important to know all these things and how they are being paid.
If you hear no closing costs, ask this vitally important
question: What am I responsible for paying? Someone may
tell you that you are getting a no-closing-costs loan, but that you are
responsible for paying the borrower fees, for example. Well, those are
closing costs. Or, you may be told that you do not have to pay closing
costs, but have to pay points. The three parts of a loan that you need to
know about are:
Ask your lender to give you a good faith
estimate of the costs you will have to pay at closing ahead of time. They
differ from loan to loan, but are generally about 3% to 6% of the mortgage
price. It will be nicer to be surprised with a lower number on closing day
than a higher number.
When you're spending such amounts of money, you want an open, honest
process with as few surprises as possible. Take the time to ask the right
questions and find who you are comfortable working with. A mortgage broker
is more because, among other things, unlike lenders, a mortgage broker has
to disclose to consumers what she or he is making on the loan.
September's Home Value Improver
Spruce Up Your Kitchen for Added Value & Pleasure
In today's real estate market, your home not only has to show well in
person, but it also must show well on a computer screen. Buyers have the
advantage of peeking inside your home from the comfort of their homes, by
looking at listing photos on the Internet. Try to imagine a potential buyer
sizing up your kitchen by how it looks on his or her computer.
Although some buyers like renovation and are willing to be displaced from
their kitchens, live with dust and noise, and negotiate with contractors
for the kitchen of their choice, most are looking for a kitchen that is
fresh, clean, and modern. If your last kitchen upgrade was interrupted
while you took breaks to play Space Invaders, it's probably time for some
sprucing. If you don't have the finances or the will for a full kitchen
renovation, do not fear. Take some quick steps that are as light on labor
as they are on your wallet.
Match your appliances. If you're happy living with your mix and
match appliances, you may not realize that uniform-color appliances are
appealing. Order different color appliance doors from the manufacturer so
that they all match, and you'll be surprised what a difference it makes.
Upgrade your fixtures and hardware. There are a multitude of faucets
and handles at your local home improvement store. Think shiny and stainless
to make your kitchen sparkle. You can also find lots of different hardware
for your cabinets and drawers. New and stylish drawer and cabinet pulls can
make quite a statement.
Replace or repair your cabinets. New cabinets will make a huge
difference in the look of your kitchen. If your budget doesn't allow it,
you can still add some pizzazz by having your cabinets or cabinet doors
Replace your kitchen counter. Although it is expensive, granite
kitchen counters give the whole room a rich look, as does Corian,
soapstone, and some other materials. A few thousand dollars is a lot to pay
for kitchen surfaces, but you will probably get it back when you sell your
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So this week the Fed lowered the federal fund rate for the
first time in four years, by 1/2 a percent. Good news, right?
Not so fast. Sure, it will help some borrowers who are in the more
traditional adjustable rate mortgages by decreasing the amount of their
rate increase at adjustment time. But for the borrowers who really need the
help -- those in the subprime loans that can adjust by as much as 7-16% --
this news brings no real relief.
By tinkering with one small economic indicator, the Fed creates a ripple
effect into other areas and changes can be positive or negative, depending
on your situation. I always think it's best to let the economy run its
course naturally, for better or for worse. My two cents, for what it's
worth - I'm always happy to hear my readers' opinions on these important
I am also always happy to help you understand the mortgage program you're
in. Please feel free to call or email anytime!
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This month's column: The Good Faith Estimate - Don't Leave Home